MUMBAI: A research report published by Media Partners Asia (MPA) indicates that the total market for online video services across 13 countries in Asia Pacific will grow from $3.5 billion in net revenues in 2014 to reach $12.4 billion by 2020, representing an average annual growth of 23.5 per cent. Advertising will contribute more than 80 per cent to the online video pie by 2020 with the subscription revenue opportunity, largely driven by subscription video-on-demand (SVOD) platforms, growing from less than $700 million in 2014 to more than $2.3 billion by 2020.
The report, entitled ‘Asia Pacific Online Video Distribution 2015’, evaluates the commercial distribution of legal over-the-top (OTT) video services in 13 markets with historical data and forecasts plus profiles of key OTT platforms.
Commenting on the report, MPA executive director Vivek Couto said, “The market for the legal consumption of OTT services in Asia Pacific is at an early stage with monetisation models nascent in most countries. As barriers to entry reduce and broadband penetration increases, more disruptors are emerging and host of new platforms are proliferating, though business models are not always scalable and issues such as piracy; content; and platform operation remain problematic. This is especially true in a number of Asian markets where piracy is significant and the limited scale of OTT video revenues are not commensurate with content costs.”
“Meanwhile, large scale global digital brands (from YouTube to Netflix) are expanding rapidly in a number of Asian markets or readying to launch in key territories over 2015 and 2016. Major local and regional television companies are also in the early stages of launching a number of large scale advertising and subscription based OTT platforms, anchored to local, Asian and Hollywood content while telecom operators are either moving upstream into content and OTT services or providing a crucial link for the ecosystem,” he added.
Key takeouts from the report include:
• Infrastructure. Fixed broadband subscribers reached 325.3 million in 2014 across Asia Pacific, equivalent to an average household penetration rate of 36 per cent. By 2020, MPA projections indicate that this penetration level will reach 40 per cent as fixed broadband subs grow to 403.5 million mobile broadband will grow rapidly, expanding at CAGR of 15 per cent over 2014 and 2020 to reach almost 2 billion subs by 2020 (58 per cent penetration of population) versus 866 million (26 per cent penetration) in 2014.
• OTT Video Consumption. Active Asia Pacific OTT video subscribers reached 594 million in 2014, according to MPA. China accounted for more 85 per cent of the market size in 2014 and will represent 80 per cent by 2020. Ex-China, the largest markets in 2014 were Korea; India; Japan; and Hong Kong. By 2020, MPA projections indicate that active OTT video customers will reach 977 million. By 2020, in Asia ex-China, India will emerge as the second largest market, followed by Korea, Japan and Hong Kong. In Southeast Asia, Malaysia will be joined by Indonesia and the Philippines as market leaders.
The market for subscription-based OTT video reached 75.3 million active subscribers in 2014 and is expected to reach 225 million by 2020. China will be the largest contributor, driven by internet-enabled TV and set-top box platforms and online video companies offering premium services. Japan, Korea, India and Australia will emerge as material opportunities, powered by SVOD but India will trend towards more a freemium-oriented model.
• Industry economics. MPA divides industry monetization models into distinct segments:
o SVOD. In terms of SVOD revenue across OTT platforms, the largest markets in Asia Pacific by 2020 will be Japan; China; Korea; and Australia. New Zealand and India will lead the next best placed group of geographies. MPA projections indicate that total SVOD-based OTT revenues in Asia Pacific will grow at a CAGR of 16 per cent between 2014 and 2020, growing from $953 million in 2014 to more than $2.3 billion by 2020.
o Online video and OTT advertising. Asia Pacific online video advertising exceeded US$3.7 billion in net terms in 2014, up 35 per cent year-on-year. The largest markets for online video advertising in 2014 were, by far, China and Japan, followed by Australia, India and Korea. By 2020, the total Asia Pacific online vide advertising pie is expected to grow to $10 billion, a CAGR of 18 per cent from 2014, with China dominant, followed by Japan and Australia. India will gain increasing scale and overtake Korea while Indonesia will be the clear leader in Southeast Asia.
OTT video advertising revenue, a subset of the online video advertising pie, reached $2.1 billion in 2014, up 43 per cent year-on-year from a low base, and almost entirely driven by China. This pie, is projected by MPA to expand to $5.5 billion by 2020 at a CAGR of ~18 per cent. China will be the largest contributor with India, Korea and Indonesia starting to become gradually significant over time.
